“This is incredibly difficult for domestic and regional travellers. They’re already frustrated about how much they’re having to pay to fly, as well as high cancellation rates for Air New Zealand in some regions.”
Citing Infare data, Air New Zealand hiked its average domestic network airfares by $51 to $200 per one-way airfare for the year ending September 2023, a 34 per cent rise on the previous year.
“But some passengers will be forced to pay more than this. For example, a return airfare from Tauranga to Nelson this weekend can cost as much as $1160 if you want to check a bag.”
Air New Zealand says the infare data quoted is incomplete and doesn’t include online and Grabaseat bookings.
The airline has said other domestic airlines in New Zealand are facing the same cost increases and are having no choice but to increase fares.
Air New Zealand GM Domestic, Iain Walker, said that according to its own figures, February domestic fares were up 2 per cent year on year, which is below inflation and the increases in its operating costs.
‘‘That’s why we’re taking steps to ensure our fares cover the cost of travel so we can continue to fly Kiwis across the country.’'
He hit back at airports.
“It’s also why we – and our competitor airlines – are so concerned about the Auckland Airport redevelopment, which will see charges increase from $9 per domestic passenger today to $46 in 2032.”
The $46 figure is an airline estimate.
Moore said airport charges only make up a fraction of a ticket.
“With 86 per cent of market share, our domestic monopoly airline essentially dictates the price, routes and flight schedule available to regional New Zealanders. Things are likely to get even harder with Air New Zealand’s aircraft shortage and engine maintenance issues.”
She said New Zealand had the least competitive domestic aviation market in the world with Air New Zealand controlling 86 per cent of the market.
The second least competitive country is Bolivia where one airline holds 84 per cent, followed by Turkey where one airline holds 69 per cent of the market, followed by Argentina and Nepal with one airline in each country holding a 67 per cent share, she said, citing Sabre market intelligence.
Moore said the Australian Government was shining a light on competition because it regards its airline market as highly concentrated, with the Qantas Group holding 61 per cent of the domestic market – low compared to Air New Zealand’s share of ours.
Australia’s Competition Taskforce has found that fares reduce by 29 per cent when a second airline is on a route.
Prices reduce by a further 31 per cent with a third airline operating. Consumers pay less than half of the monopoly price on a given route if three airlines are competing against one another.
In New Zealand there has been no policy effort to create the conditions for greater market competition in air passenger transport.
And unlike in Australia and other developed countries, there is no transparent airfare and market performance monitoring in New Zealand to support consumers paying a fair price.
“The Government has the tools to take action,” Moore added.
“The legislative work is already done - the new Civil Aviation Act 2023 provides the Ministry of Transport with the information-gathering power to set up an independent airfare monitoring process.
“Let’s start now to ensure we have appropriate scrutiny on airline performance and pricing and consumers can see for themselves if they are getting a fair deal, now and in the future.”
The Herald has also called for greater scrutiny of airline behaviour as the row with Auckland Airport over aeronautical fees heats up and airlines call for a new regulatory regime for airports.
Consumer NZ’s chief executive Jon Duffy says more oversight is necessary.
“We would welcome greater oversight and scrutiny of the industry to protect us from price gouging.”
Transport Minister Simeon Brown has been contacted for comment.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
